Car sales hit record high lifted by economic recovery

Car sales hit record high lifted by economic recovery

New Delhi: Indian car sales raced to a record monthly high of 145,905 units in January as demand was boosted by cheap loans and a recovering economy, an industry group said Tuesday.

Domestic passenger car sales were up 32 percent year on year, according to the Society of Indian Automobile Manufacturers (SIAM) as the country’s middle class continues to grow.

“This marks the highest ever (monthly) sales," SIAM director general Dilip Chenoy told reporters in New Delhi.

“Economic growth, reduced interest rates and better money supply have helped the industry post such growth," Chenoy said.

The figures come as auto firms have been ramping up production in India as they eye the explosive expansion of the country’s car market, Asia’s third biggest.

The SIAM added that by 2016 annual sales are expected to double from the current level of about 1.8 million.

The industry has been helped by an economic rebound, spurred by government stimulus and aggressive monetary easing -- aimed at beating the effects of the global downturn -- which has led to cheaper loans.

The previous highest number of car sales was in March 2009 when 129,358 cars were sold.

Motorcycle sales grew even faster in January than cars, jumping 43.69% to 650,633 units and sales of trucks and buses -- seen as a key indicator of economic activity -- increased 131% to 53,447.

Total vehicle sales in all categories increased 45% to 1,114,157 units in January, the industry body added. The previous highest total was 1,017,198 units in October 2006.

January’s purchases may also have been spurred by fears the government could hike taxes in this month’s budget as it looks ahead to the next financial year starting in April, industry officials said.

With India’s economy set to post at least 7.2 percent growth in the current year to March 2010 and forecast to grow by at least eight percent next year, finance minister Pranab Mukherjee is expected to start rolling back fiscal stimulus measures in the budget.

The strong vehicle sales growth was also helped by last year’s low base figure when the economy slowed during the global financial crisis, which sent the auto industry into a tailspin.

Manufacturers such as market leader Japanese-owned Maruti Suzuki, South Korea’s Hyundai Motor and US giant General Motors all reported record monthly sales in January.